New PM should initiate a ‘Marshall Plan’ for Yemen’s recovery

New PM should initiate a ‘Marshall Plan’ for Yemen’s recovery

Abdel Aziz Aluwaisheg

October 16, 2018 16:28

Yemen President Abed Rabbo Mansour Hadi, in a dramatic move, on Monday dismissed Prime Minister Dr. Ahmed bin Dagher and chided him for his government’s economic failures. He appointed Dr. Maeen Abdel Malek Saeed as the new PM and a newcomer, Salem Al-Khanbashi, as deputy prime minister.

Hadi’s decree used unusually harsh words to describe the government’s failures, such as “negligence” and an inability to take “real measures to stop economic deterioration, especially the collapse of the currency.” The decree also stated that Bin Dagher would be investigated for his failures.

Hadi’s move is a clear indication that he recognizes that improving economic conditions has become key to winning Yemen back. Yemen’s failed economy, including the free-falling Yemeni riyal, has made it difficult to win the war or deal effectively with the humanitarian situation. The Houthis have used these failings to their advantage. They have blamed the internationally recognized government for the lack of services and non-payment of government employees and security personnel. The Houthis have also used the deteriorating humanitarian situation to blackmail the government, the coalition and the international community into accepting their de facto control of large parts of Yemen

UN special envoy Martin Griffiths has lately woken up to the close links between finding a political solution and fixing the economy. He reportedly said last Thursday: “There’s no doubt in my mind whatsoever that this economic issue is now the overwhelmingly most important priority.” He added: “Within the UN, we’re talking about the need for such a master plan... an immediate set of measures over weeks which the World Bank, IMF, UN agencies, the Gulf obviously, the government of Yemen could come together to discuss."

The most immediate problem is the collapse of the Yemeni riyal, which has plunged from about 200 to the US dollar at the beginning of the crisis to more than 700 last week. Since Yemen imports most of its food from abroad, that means the cost of food is rising to levels beyond the reach of many families, especially due to the lack of jobs and non-payment of salaries for many employees.

Saudi Arabia provided $200 million as a deposit in the Central Bank of Yemen this month, on top of earlier deposits of about $3 billion, in an effort to bolster the currency. But, as Griffiths said last week: “I don’t think we can always rely and shouldn’t always rely on Saudi generosity to put money into the system.”

That the Yemeni riyal is rapidly losing its value is not the only problem. It is a symptom of a larger problem of a lack of economic activity and exhausted foreign reserves. What can change the situation is an energized recovery, stabilization, and reconstruction in areas where security permits. But, for this to work, a change is needed in the way the government runs this process.

New Yemen PM Saeed must work to create a 'Marshall Plan' for the country as joint management of its reconstruction should help deal with the concerns of international donors.

Abdel Aziz Aluwaisheg

Saeed is in a position to lead the economic recovery and reconstruction. He was a well-regarded minister of public works in the outgoing government, in charge of important aspects of the recovery and reconstruction program. He hails from Taiz, a city divided and besieged by the Houthis since 2015, and as such is the first prime minister from Yemen’s north in a long time, as this post was traditionally occupied by southerners. He was trained as an architect and has served as a university professor and civil society activist. These are very impressive credentials, which should enable him to hit the ground running, without interruption, especially as Hadi has asked that all current ministers stay in their posts.

How can the international community and Yemen’s neighbors help? How is it possible to restore confidence among ordinary Yemenis and investors?

There is a lot of goodwill toward Yemen and a clear desire among donors to help the country. Significant humanitarian aid has been pledged and much of it has been delivered, but most of that was to meet immediate short-term needs. To address the roots of Yemen’s suffering, longer-term aid is needed for recovery projects, stabilization and reconstruction.

But, for medium and long-term aid to materialize, the government has to provide transparent and accountable channels to use the funds efficiently. It has to work with donors, accommodate their preferences and meet their conditions. A decentralized mechanism is needed that delineates a practical division of labor between the two sides.

Yemeni officials have frequently called for the adoption of an international or regional “Marshall Plan” to reconstruct Yemen. The essence of such programs is shared management and oversight. As in post-war Europe, joint management of the reconstruction process should help deal with the concerns international donors have. It would also make it easier for that process to continue during periods of transition and uncertainty.

Joint oversight and management between Yemen and the donors could help ease concerns about corruption, which is one reason for hesitation in fulfilling donor pledges. There are tried and tested anti-corruption mechanisms that have been deployed successfully elsewhere.

The shared management could also help in directing aid to the areas most in need, as well as strategically located areas.

To run this shared management and oversight, a donor coordination process is needed, similar to the process that existed before the crisis. Later, a commission could be formed — in a partnership between the Gulf Cooperation Council, the government of Yemen and international development agencies with successful experience from elsewhere — to run the reconstruction process. The coordination could take different shapes, including co-financing or parallel funding, but should avoid pooled funds, except for small projects.

The first step should come from the new prime minister of Yemen, who should call for a meeting of donors to work on the process to create a new “Marshall Plan” for Yemen.

Abdel Aziz Aluwaisheg is the GCC Assistant Secretary-General for Political Affairs & Negotiation, and a columnist for Arab News. The views expressed in this piece are personal and do not necessarily represent GCC views. Twitter: @abuhamad1

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